Collaborative negotiation techniques for mobile personal trusted device financial transactions

ABSTRACT

Techniques for negotiation techniques for mobile personal trusted device financial transactions are provided. A user of a mobile personal trusted device sets user preferences that define the user&#39;s preferred parameters for conducting financial transactions. A merchant sets merchant preferences that define the merchant&#39;s preferred parameters for conducting financial transactions. When a financial transaction is initiated, a user preference and a merchant preferences are accessed. A negotiated preference is generated that accommodates both the user preference and the merchant preference. If the user preference and the merchant preference are not mutually exclusive, the negotiated preference attempts to satisfy both preferences. If the user preference and the merchant preference are mutually exclusive, the negotiated preference satisfies at least one of the two preferences based on which of the two preferences has a higher priority. The financial transaction is conducted based on the negotiated preference.

CROSS-REFERENCES TO RELATED APPLICATIONS

This patent application is a continuation of U.S. patent applicationSer. No. 12/287,283, filed Oct. 7, 2008, which is a continuation of U.S.patent application Ser. No. 11/137,682, filed May 24, 2005, which is acontinuation-in-part of U.S. patent application Ser. No. 10/428,502,filed May 2, 2003, which claims the benefit of U.S. provisional patentapplication No. 60/411,536, filed Sep. 17, 2002, the disclosure of eachof which is incorporated herein by reference in its entirety.

BACKGROUND OF THE INVENTION

The present invention relates to techniques for collaborativelynegotiating financial transactions, and more particularly, to techniquesfor accommodating merchant and buyer preferences that relate tofinancial transactions.

Devices such as personal Digital Assistants (PDAs) and cellulartelephones are examples of mobile Personal Trusted Devices (PTDs). Asused herein, the term personal trusted device (PTD) refers to a devicehaving processing and storage capabilities allowing it to host and tooperate a data aggregation software application useful for managing andmanipulating information. Devices falling within this definition may ormay not include a display or keyboard, and include but are not limitedto cell phones, wireless communication tablets, personal digitalassistants, RF proximity chip cards, and laptop personal computers.

PTDs may be able to perform secure data transfer functions such as, forexample, hardware identification or software authentication functionsthat are used in a non-repudiation process with the device creditors ordevice owners. Many PTDs can communicate via cellular and wireless ISPnetworks over long distances. Many PTDs can also exchange data overshort ranges, typically 1 mm-10 meters, for purposes of secure datasharing between PTD devices and such peripheral devices as printers.

Cellular phones provide a variety of transactional features. Forexample, cellular phone users can access bank accounts and purchaseitems from merchants. Consumers are also able to access personalaccounts and purchase merchandise via websites and similar portals.Cellular networks can provide support functions such as consumerauthentication, device authentication, transaction authorization, eventlogging, and settlement, all necessary functions for a non-repudiationprocess typically required by creditors.

An RF proximity chip card is a card that contains an integrated circuitand an antenna for power coupling and data communications. An RFproximity card typically receives power for on-card electronic functionsfrom an induced electromagnetic field generates within about 10 cm of acommunications transceiver. Data is transferred to the on-card chip viaelectromagnetic sub-carriers and switching of the electromagnetic field.

Prior art computers allow users to set preferences associated withfinancial transaction that are conducted over the internet. For example,a computer user can select a preferred credit card to be used withtransactions conducted through a particular web site.

Merchant web sites can also have preferences associated with financialtransactions. For example, a merchant may prefer that consumers purchasethe merchant's goods using a merchant issued credit card. A merchantmay, for example, offer discounts to consumers who use the merchantissued credit card.

However, prior art systems have not provided techniques for resolvingdifferences between a merchant's predefined preferences and a buyer'spredefined preferences in a transparent mode. Therefore, it would bedesirable to provide techniques for conducting financial transactionsthat accommodate both the merchant's predefined preferences and thebuyer's predefined preferences regarding financial transactions.

BRIEF SUMMARY OF THE INVENTION

The present invention provides techniques for collaborativelynegotiating financial transactions between merchants and buyers. Buyersconduct financial transaction using devices such as mobile personaltrusted devices (PTDs) and mobile personal computers (PCs) in networkedenvironment that is typically comprises of infrared or long-rangetransceiver. Merchants typically conduct financial transactions using anelectronic merchant point-of-sale system such as a magnetic cardacceptance system.

According to the present invention, a user of a mobile PTD/PC setspredefined user preferences that indicate the user's preferredparameters for conducting financial transactions. A merchant setspredefined merchant preferences that indicate the merchant's preferredparameters for conducting financial transactions.

When a financial transaction is initiated, a user preference and amerchant preference are accessed. According to the techniques of thepresent invention, a negotiated preference is generated thataccommodates both the user preference and the merchant preference. Ifthe user preference and the merchant preference are not mutuallyexclusive, the negotiated preference attempts to satisfy bothpreferences. If the user preference and the merchant preference aremutually exclusive, the negotiated preference satisfies at least one ofthe two preferences based on which of the two preferences has a higherpriority. The financial transaction is conducted based on the negotiatedpreference.

A further understanding of the embodiments of the present invention canbe made by way of reference to the ensuing detailed description taken inconjunction with the accompanying drawings.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is an illustration of a POS RF and IR proximity adapter coupledto a conventional magnetic card reader, a dedicated remote server, and aplurality of PTD devices according to embodiments of the presentinvention;

FIG. 2 is an illustration of a POS RF and IR adapter permanent in-slotdual inductor dynamic simulacrum installed with a conventional magneticcard acceptance system according to an embodiment of the presentinvention;

FIG. 3 is a descriptive diagram of a data management communicationsystem including a dedicated server and wireless carrier/ISP networksaccording to an embodiment of the present invention;

FIG. 4 illustrates three wireless Personal Trusted Devices (PTD)including user interfaces provided by an FDA application according toembodiments of the present invention;

FIG. 5 illustrates FDA application user interfaces on cellular phonesfor enabling a user to select a payment method to complete a purchasetransaction according to an embodiment of the present invention;

FIG. 6 is a diagram describing features of an FDA application accordingto an embodiment of the present invention;

FIG. 7 illustrates an FDA application registration and download processaccording to an embodiment of the present invention;

FIG. 8 illustrates typical user personal data fields that can be used byan FDA application according to embodiments of the present invention;

FIG. 9 illustrates typical user transaction data fields that can be usedby an FDA application according embodiments of the present invention;

FIG. 10 illustrates typical user preferences data fields that can beused by an FDA application according to embodiments of the presentinvention;

FIG. 11 illustrates FDA application and soft-card download methodsaccording to embodiments of the present invention;

FIG. 12 illustrates a network-based merchant loyalty plug-in processaccording to embodiments of the present invention;

FIG. 13 is a flow chart that illustrates an interface process between aPOS magnetic card acceptance system adapter and an FDA applicationaccording to an embodiment of the present invention;

FIG. 14 illustrates merchant and buyer single-step collaborativesoft-card negotiations according to embodiments of the presentinvention;

FIG. 15 illustrates single-step and negotiated purchase processesaccording to embodiments of the present invention;

FIG. 16 illustrates FDA application purchase processes at an attendedPOS system according to an embodiment of the present invention;

FIG. 17 illustrates an FDA application purchase process at an unattendedPOS system according to an embodiment of the present invention;

FIG. 18 illustrates a PTD peer-to-peer transaction process according toan embodiment of the present invention;

FIG. 19 illustrates a functional level diagram of several embodyingfeatures of the present invention; and

FIG. 20 illustrates a component level diagram of several embodyingfeatures of the present invention.

FIG. 21 is a simplified schematic diagram of an embodiment of a systemin accordance with the present invention, allowing use of acoalition-type card.

FIG. 22 is a simplified flow diagram of a method in accordance with anembodiment of the present invention showing steps of using acoalition-type card.

DETAILED DESCRIPTION OF THE INVENTION

People using computing devices such as PCs and PTDs are typicallyreferred to as users. People or entities that buy merchandise aretypically referred to as buyers, and people or entities that sellmerchandise are typically referred to as merchants. With respect tofinancial transactions conducted over a distributed computing systems,buyers are often referred to simply as users in the present application.

FIG. 1 is a visual representation of an embodiment of the presentinvention, and devices that embody features of the present invention.FIG. 1 illustrates a conventional merchant magnetic card acceptancesystem 20, an adapter 35 of the present invention, and a server 60 ofthe present invention. ViVOadapter™ is a commercial embodiment of anadapter 35 of the present invention. ViVOserver™ is a commercialembodiment of server 60. FIG. 1 also illustrates a personal digitalassistant 30, a cellular telephone 40, and a proximity chip card 50 thatembody features of the present invention.

An adapter 35 of the present invention comprises an Merchant pod (M-pod)10 and a Consumer pod, “C-pod™” 12. M-pod 10 substantially permanentlyattaches into the Merchant's magnetic stripe card acceptance system 20via card swipe slot 14. M-pod 10 translates data signals (e.g.,infra-red (IR), Bluetooth, IEEE 802.11(b), and cellular-based systemsdata) received by the C-pod 12, into a digital electromagnetic mediumcompatible with the conventional magnetic card acceptance system 20.

C-pod 12 is remotely located and acts to communicate with the consumer'smobile financial transaction personal trusted devices (PTDs) thatinclude the personal digital assistant 30, cell phone 40, and RFProximity Card 50. The server 60 is an internet and cellular/wirelessISP-based server that hosts and provides services according toembodiments of the present invention.

Adapter 35 can establish communications, with multiple format mediums,between the personal mobile financial transaction/PTD devices and cardreader 20. Adapter 35 allows concurrent access to the magnetic cardswipe/insert reader slot 14 on reader 20. Adapter 35 may have the M-podand C-pod integrated as a single component.

An FDA application of the present invention that manages financial dataand purchase transactions resides on PTDs 30, 40 and 50. Graphical userinterfaces of the FDA application are displayed on display screens inPTDs 30 and 40 to guide a user through financial transactions.ViVOwallet™ is a commercial embodiment of an FDA application of thepresent invention.

M-pod 10 includes a permanent in-slot dual inductor dynamic simulacrum15. FIG. 2 is a representation of a permanent in-slot dual inductordynamic simulacrum 15 that can be installed with a conventional magneticcard acceptance system 20. Adapter 35 is generally identified forcompatibility with existing POS systems that include the magnetic cardswipe acceptance systems and the magnetic card insert acceptancesystems.

Adapter 35 translates IR and RF signals from the PTD based FDAapplication to a medium acceptable to existing legacy POS magnetic cardswipe/insert acceptance systems. At the same time, adapter 35 ensurescontinued concurrent access to the card swipe slot 14 for normaltransactions with magnetic debit, credit, prepaid, ATM, loyalty, andmember cards.

The card swipe acceptance adapter 35 has mechanical design to conform tothe POS magnetic card swipe acceptance systems, such as the VerifoneTranz 330/380. The finite thickness tape with the differential inductorsimulacrum 15 is aligned and substantially permanently inserted into thecard swipe slot 14 and aligned with the existing POS magnetic cardacceptance system magnetic reader head component in such a manner as tomaintain continued access to the swipe or insert slot for normal cardreading functions.

The finite thickness tape with the differential inductor simulacrum 15is attached to M-pod 10 and substantially permanently placed into a POSmagnetic card swipe acceptance system 20 as shown in FIG. 2. Simulacrum15 is secured with an anchor on the end of the tape or glued on the bodyof the tape. Simulacrum 14 is designed specifically to allow card swipeaction to be effected in the POS magnetic system, whereby a standardmagnetic stripe card slides directly between the tape and the POSmagnetic card acceptance system magnetic head reader component.

The tape is attached to the POS magnetic card acceptance system viachemical or mechanical means that may include an anchor at the end ofthe swipe/insert slot. Further details of an adapter for a magnetic cardreader with a simulacrum are discussed in commonly-assigned U.S. patentapplication Ser. No. 10/327,638 to Khan et al., filed Dec. 19, 2002;commonly-assigned U.S. patent application Ser. No. 10/306,618 toFernandes, filed Nov. 27, 2002; and commonly-assigned PCT PatentApplication PCT/US02/41008 to Fernandes et al., filed Dec. 19, 2002, allthree of which are incorporated by reference herein.

Further embodiments of adapter 35 include an integral cellular/wirelessISP data transceiver, typically integrated for PTD-wireless network/ISPand PTD-adapter RF and SMS (Short Messaging Service) protocolcommunications for transactions beyond infrared distances.

An alternate embodiment of an adapter of the present invention is theintegration of a cellular transceiver device. This embodiment willenable the user to dial the number associated with the adapter andeffect a purchase via direct PTD to adapter communications, via awireless carrier/ISP network, or via SMS protocols. This integraltransceiver allows on-line transactions with the support of server 60,and off-line transactions with the use of such tokens as gift cards,coupons, and prepaid monetary representations.

A benefit of this configuration is that the user effects a transactionvia different short and long-range mediums, including the Internet,wireless carrier/ISP, IR, IEEE 802.11(a)(b), Bluetooth, and SMS. Theintegrated wireless network data transceiver also enables Merchant datasharing and transaction digital receipt generation. Additionally, thetransceiver accommodates on-line and off-line transactions.

According to one embodiment, adapter 35 can capture magnetic card dataduring the normal card swipe process, encrypt this data in securemanner, and transmit it to an FDA application in the form of aSoft-Card. Concurrent use of the card swipe slot by the adapter 35 andthe user magnetic card is an important feature of this process.

FIG. 3 is a descriptive diagram of the network-based server 60 databasemanagement system that augments and supports accounting functions, suchas Billing on Behalf of Others (e.g., Buyers), by cellular operators andwireless ISP operators. This system can be integrated with the cellularand wireless ISP operators, or can be a separate commercial product forthis purpose.

According to one embodiment of the present invention, server 60 providesaccounting functions such as billing for financial transactions, only ifa cellular or ISP service does not provide these features. If a cellularor ISP service provides accounting functions to PTDs/PCs, server 60 isnot needed to provide these functions.

According to an embodiment of the present invention, server 60 includesa database management system. This database management system cancommunicate and exchange user data and financial data with a user'sPTD/PDA and a user's personal computer (PC) via internet 65, viawireless carrier/ISP networks 66, and/or via Applications ProgramInterface (API) portal 67 to a cellular/wireless network.

Server 60 hosts web-based applications in a secure and private process.Server 60 also provides user registration and application downloads. InFIG. 3 and other figures herein, the FDA application is referred toVIVOwallet or VW.

A Soft-Card is an electronic card that is associated with a user account(such as a credit card account or a membership in a merchant loyaltyprogram). An icon is typically displayed on a PTD to identify aSoft-Card to a user.

Server 60 hosts data associated with Soft-Cards. Soft-Card data can, forexample, include a user name, address, and account number. Soft-Carddata can also include data encoded in magnetic cards on track #1 andtrack #2. Soft-Card data may also include proprietary data on track #3,that may be required by ATM machines. The data on magnetic card tracks#1 and #2 is presently used for transaction processing by clearinghouses, card transaction authorizers, and card acquirers. Theproprietary data on any track may be required by card issuers/acquirersand ViVOtech, Inc. to verify that transactions were effected with an FDAapplication. The security of an FDA application results in lowertransaction fraudulent risk to the card issuer and resultant lowerinterest and transaction processing fees. The fee difference may providea revenue for ViVOtech.

Server 60 is the primary reference system for pay-and-go, single-step,and peer-to-peer transactions. Server 60 performs functions such asproviding notification of transactions to remote systems. Server 60 alsohas processes that synchronize communicates and data exchange betweenPTD and PC based applications of the present invention. Server 60generates and/or manages passwords, authentication codes, encryptioncodes, and keys, and maintains the Public Key Infrastructure (PKI), anddynamic CVCC-type codes to provide more secure transactions.

Server 60 enables a user to manage multiple cards and banking accounts.Server 60 communicates with internet-based Personal Computer systems viathe internet 65. Server 60 communicates with FDA applications via PTDwireless carrier/ISP network 66 or via API portal 67.

Server 60 maintains a user application that includes personal userinformation, user device synchronization services, and financialtransaction data relating to issued cards. The transaction data is usedto associate purchases from a PTD or PC with acquirer transaction data.

Server 60 maintains merchant loyalty programs and offers them to theuser in the form of “Merchant loyalty plug-in” modules. The loyaltyplug-in modules self-configure based upon a user's personal data fieldsshown in FIG. 8.

Server 60 also maintains and facilitates communications and dataexchange from merchants to customers' PTDs. For example, server 60 canfacilitate the transfer of promotions and one-on-one marketing data tocustomers' PTDs.

A benefit of the internet-based server 60 is that it aggregates all ofthe financial and card information provided by a user. Another benefitof server 60 is that, upon request by the user, it acts as anintermediary for consolidated payments and settlements (e.g., between acustomer using a PTD device and a merchant via at a magnetic cardreader). A user (e.g., merchant or consumer) can send data to server 60from a mobile or stationary device. Thus, users are not restricted to aspecific location.

Further, server 60 notifies PTD and PC users of transaction events.Notification can be in the form of SMS messaging, text messages,text-to-voice, text-to-e-mail, and text-to-fax. Server 60 can exchangemoney for tokens, similar to the Pay-Pal™ and Yahoo! Pay-Direct™processes that currently exist for Internet purchases. A user can directserver 60 to render invalid all cards referenced on the databasemanagement system in the event of loss or theft of the user's cards.This is advantageous as a one-call notification of lost cards so thatall associated card issuers can be notified.

In FIG. 4, three common variations of Personal Trusted Devices (PTD) aredepicted as a cellular phone 40, Personal Digital Assistant (PDA) 30,and a Radio Frequency proximity card (RF proximity card) 50. The devicesshown in FIG. 4 are examples of mobile devices that can host a financialdata aggregation application (i.e., FDA application) according to thepresent invention. An example of a user interface 31 generated by afinancial data aggregation application is shown on the view screens ofdevices 30 and 40 in FIG. 4.

RF proximity card 50 also embodies features of the present invention.For example, card 50 operates an embedded, non-user interface, versionof the financial data aggregation application. The RF proximity card isa card that typically has an integral and internal coil/antenna. An RFproximity card can exchange data with adapter 35 from a distance withoutphysically contacting the adapter. Conventional magnetic cards, on theother hand, have to be swiped through a card reader. The coil antenna ofan RF proximity card conducts radio frequency (RF) inductive coupledcommunications with a host system using RF proximity card issuerproprietary protocols or those associated with standards ISO/IEC 14443type A/B and ISO/IEC 15693. The RF signals allow an RF proximity card tocommunicate with a host system such as a magnetic stripe card acceptancesystem from a short distance.

RF proximity cards typically have microprocessors that are used forcommunications and security protocols as well as RAM, ROM, and microcodethat supports the microprocessor. These on-board components and codeenable the card to implement challenge authentication routines, dataciphering for secure data transfer, and non-repudiation schemes. The nonrepudiation schemes can, for example, operate by exchanging networkauthorization server codes and unique identifier codes betweenmanufacturers, issuers, acquirers, authenticators, or third partiesdesignated or authorized by an entity such as ViVOtech, Inc.

The RF proximity cards are typically categorized as passive and active.The RF proximity cards contain financial transaction data typical tocredit, debit, ATM, pre-pay, loyalty, and other magnetic stripe cards.The construction and proximity operations of RF proximity cards isspecified in ISO 14443 type A/B and ISO 15693 protocols. Data storageand communications specifications are typically proprietary to the cardissuer. Typical RF cards are highly rugged for extreme environments andare not susceptible to data loss through magnetic or mechanical means.On the other hand, ISO/IEC 7811 standard formats that are used forconventional magnetic stripe cards are more susceptible to data lossthrough magnetic or mechanical means.

A benefit of the use of RF proximity cards is the privacy and securitythat is achieved by the short range communications distance defined byISO 14443 Type A/B and ISO 15693 protocol standards specifications. Thisprotocol defines close-coupled inductive communications interface anddata exchange at distances equal or less than 10 cm.

The close-proximity communications of these cards is inherently moresecure than long distance communications. Also, the close-proximitycommunications of these cards uses less computationally intensive cipherschemes than the omni-directional longer range Bluetooth radiationprotocols, or the longer distance IrDA or consumer infrared opticalcommunications protocols. RF proximity card hardware components andsupporting circuitry are cost effective relative to the much higher costof RF and IR components and supporting circuitry. This is advantageousfor the user of RF proximity cards.

Additionally, the RF proximity card is contactless and has no activeuser interface. This lack of user interface ensures ease of useracceptance with minimal user interaction. To use an RF proximity card, auser merely has to introduce the card to the RF capable adapter 35within the required distance for a period of time sufficient to meettransparent and proprietary communications protocols and data exchangerequirements.

Cell phone 40 and PDA 30 have cellular/wireless ISP transceivers and anintegral Infrared (IR) communications device 33. This Infraredcommunications device typically references and/or conforms to InfraredDevice Association (Irda v1.2 and higher) communications protocols,allowing diverse devices to communicate with a standard protocol.Optional amplifiers can enable IR communications beyond the IrDA 1.2specification distance. Amplifiers have demonstrated reliablecommunications up to 50 meters.

PTD graphics interfaces 31 are examples of interfaces that can bepresented by a financial management application of the present inventionresiding on devices 30 and 40. The financial management applicationincludes the pay-and-go feature that has controlling access to theintegrated IR communications device 33 to effect communications with theRF adapter 35.

Cell phone 40 and PDA device 30 typically utilize subscriber prepay orcredit services with routine and periodic billing by the wirelesscarrier/ISP. The wireless carrier/ISP can be a commercial serviceprovider. The wireless carrier ISP can support voice and/or datatransmission with typical network sharing methods ofCDMA/CDPD/TDMA/GSM/and future spectrum sharing methods with a cell phoneor other PTD. The wireless carrier ISP can communicate via proprietarywireless infrastructure or via a wired interface with transmissioncells/nodes and “bridges” with wired carriers and their services. Thewireless carrier ISP can also communicate with seller Point-of-Sale(POS) local area network gateways to cover areas not serviced by thewireless cell nodes.

The PTD devices have unique identifier codes that include SubscriberIdentification Modules (SIM), Electronic Identification Numbers (BIN)and Caller Identification (Caller ID), and other unique subscriberidentification codes. The unique identifier codes associate usage to aunique subscriber in a non-repudiation scheme/method typical to thecredit/debit/ATM industry via personal identification number (PIN)codes, and the cellular phone industry via SIM/EIN/Caller ID codes.

These devices typically establish connection with the wirelesscarrier/ISP via a secure connection. The voice and/or data is encryptedfor security. All transactions via the PTD integral electromagneticcommunications systems are secured via standard cryptographic measures.These measures include asymmetrical RSA key generation within the PublicKey Infrastructure (PM) protocols and DES/AES symmetric key generationby the sending and the receiving devices. The resident database andfinancial applications programs are secured with local cryptographicmeasures that include password access typical to most applications.

A benefit of the wireless network-based PTD is that financialtransactions are conducted in near real-time. Transactions are processedand notifications are sent within seconds or minutes of the actualtransaction. Additional benefits are provided by the use of “strong”cryptography that encodes credit/debit/ATM/pre-paid/loyalty/member cardinformation and maintains security in real-time.

“Strong cryptography” is generally defined as 1024 bit asymmetric keysgenerated by RSA methods, particularly the D-H algorithm, for Public KeyInfrastructure, and 128 bit “DES/AES,” or similar for symmetric keygeneration typically found on cell phones and smart cards.

A benefit of the use of infrared communications is the privacy achievedby short range communications distance and communications “cone” of +and −15 degrees maximum off-axis, as defined by the Irda v1.2communications specification. This protocol defines high-speed digitalbit patterns transmitted by the electro-optical infrared devices forreliability of data transfer over a short-range distance ofapproximately 1 mm-1 meter. IR hardware components and supportingcircuitry are cost effective relative to the much higher cost of RFcomponents and supporting circuitry.

FIG. 5 is a graphical user interface provided by an FDA application ofthe present invention on a display screen of cellular phone 40. The userinterface illustrates the sequence of card data in the FDA application.FIG. 5 shows how symbols associated with card issuing and card standardsbodies are used by the FDA application.

The graphic interface includes links to default card 112, the portfolioscreen 114, the options screen 116, the preferred view card 118, and theall cards screen 119. The all cards screen image can include Soft-Cards122 installed on the PTD. Device button sequencing can be used to accessall cards 124 in a manner typical to PTD. The physical sequencing ofapplication data is typically controlled by the PM manufacturer and thecard issuer/banks maintain the icons and trade names.

FIG. 6 illustrates examples of steps that a financial data aggregationapplication can provide to a user. The steps shows in FIG. 6 are merelyillustrative and are not intended to limit the scope of the presentinvention. As discussed above, the financial data aggregation (FDA)application can function on a user's PTD device or personal computer.The financial data aggregation application first provides step 210, inwhich is a welcome screen identifies the application and requests theuser to log on with a password for authentication purposes. PTD usersand web-based users are then authenticated.

In steps 215, the FDA application allows a user to select a credit,debit, prepay, or other type of credit card with an associated PIN, or aglobal PIN for all cards. These cards are soft-cards in that dataresiding locally or remotely allows a user access to some type ofaccount, much the same as a conventional credit, ATM, or debit card. Thesoft-card data is securely maintained by the FDA application or remotelyon server 60. The user can then make a transaction such as buyingmerchandise from a merchant. The FDA application reviews the transactionand the card status. The FDA application can then synchronize the user'sdevice with the merchant device (e.g., adapter 35), another user'sdevice, or other remote device (e.g., server 60) and begins apeer-to-peer transaction.

A user can also select the pay-and-go feature 220, or the single-stepfeature 230, for mutual authentication of the user's PTD and amerchant's adapter 35. In each mode, the user's device and themerchant's device are authenticated for security purposes, although thepay-and-go feature allows the user to set a pre-defined transactionlimit that can be effected without a security PIN. In the single stepmode 230, the user can receive loyalty data such as coupons ordiscounts. Server 60 can act as a intermediary between the user's deviceand the merchants device.

The user can orient a cell phone IR communications component at pod 12within a typical distance of 1 millimeter to 1 meter. Adapter 35acknowledges the request and establishes inter-device communications,exchanges mutual authentication processes, and establishes a dataencryption key for a secure data transmission session when wireless andinfrared network communication is present.

The user can approve every step of the transaction process viapre-defined preferences or active real-time negotiation. The user canacquire merchant loyalty/member benefits in real-time, orpost-transaction with reconciliation by server 60 or thecellular/wireless ISP operator actions, if provided. The user cansynchronize the application, review card status, make transactions inphysical space or virtual internet space, and make payments to the cardissuers/acquirers.

FDA application receives magnetic card data directly from adapter 35, asdescribed above. The user can cancel, over-ride, and maintain fulltransaction options at any point during the transaction process. Theuser also has remote cancel and erase functions via the server-based FDAapplication and the PTD-based FDA application. Soft-Card data alwaysremains under full control of the user, and may be cancelled, erased,transported, or otherwise modified only by the User, server 60, or thecard issuer.

An additional data string can be appended to data exchanges involvingtransactions with server 60. This data string will include part of aunique message transaction code such as a message digest, digitalsignature, or a device serial number. This data string may be ViVOtech,Inc. company proprietary, or a cooperative of cardissuers/acquirers/transaction authorizers and may be used for suchpurposes, though not limited to, transaction profiling, non-repudiation,event logging, merchant adapter association, etc.

The data string can identify a Merchant associated with a stolentransaction. For example, the data string can identify the owner of anadapter 35 used to conduct a transaction with a stolen credit card.

An embedded version of the FDA application can reside on RF card 50. Theembedded FDA application on card 50 includes Soft-Card data that can bemanaged by server 60. A processor on card 50 can automatically presentspecific soft-cards to adapter 35 upon interrogation by adapter 35. Theembedded FDA application can maintain soft-cards such as credit, debit,royalty, ATM, pre-paid, and member cards. The embedded version of theFDA application does not have an RF card user interface, but can bemanaged by the user via the FDA application residing on server 60.

An important aspect of the FDA application is the ability to effectcollaborative negotiations between the PTD and adapter 35. This reducesmerchant risk and emphasizes merchant-buyer relations.

As discussed above, a benefit of RF proximity cards is that they requireshort distance communications. An internet or verbal-based exchange ofcard data is less secure, and therefore incurs higher transaction fees,higher vendor qualification, and higher vendor risk. A short distancetransaction is more secure because of standard methods of useridentification available to a merchant. Card data can be transferred ina secure process using a non-repudiation scheme that associates thetransaction with unique PTD serial numbers, FDA serial numbers, and userparameters such as a PIN.

A benefit of providing the FDA application on a wireless network-basedPTD is that an unlimited number of consumer cards can be aggregated. Theconsumer soft-cards can be maintained on server 60 and the PTD foraccess by the consumer. By providing numerous soft-cards that areaccessible from a PTD, card “bulk” in the consumer's wallet issubstantially reduced. This system also increases security of the datamaintained on existing cards by providing encryption and the other datasecurity techniques mentioned above.

Other features of the FDA application on a PTD include the ability toeffect financial transactions via infrared (IR) signals, Short MessagingService (SMS) protocol and networks, text paging, and viaradio-frequency signals on a device-to-device means or via the wirelesscarrier/ISP network.

Another benefit of this process is the low cost of wirelesscommunication sessions and resultant fees associated with thetransaction costs relative to wired carriers. Also, cell phones andother PTDs typically have non-repudiation schemes that provide “strong”encryption standards ensuring lower “card present” transaction fees.

FIG. 7 is a flow chart that illustrates examples of the FDA applicationdownloading and installation steps that can be performed by an FDAapplication of the present invention. At decision step 315, the processdetermines if the user has internet access and a PTD cradle. If so, theuser completes a web-based registration form on server 60 and receivesdownload authorization and a primary web-based FDA application at step320. At step 325, the user authenticates his FDA application withsecurity protocols that can include a PIN/password. At step 330, theuser configures the FDA application preferences, and requests asoft-card download. At step 340, the user configures soft-cardpreferences that can include a default soft-card or a single step orderand payment process.

If the user does not have internet access and a PTD cradle, the usermust establish a web-based FDA application with an authorized entity atstep 321. The user downloads the FDA application and authorization codesat step 322. The user downloads Soft-Card data at step 327. The user canexchange FDA application data with other user authenticated FDAapplications at step 345.

Alternatively, the User can download the FDA application directly to thePTD from the cellular/wireless ISP. The FDA application can bedownloaded, for example, by dialing or saying, if applicable service isavailable from server 60 or the cellular/wireless ISP provider, aspecific number and establishing mutual authentication with a uniquePIN/password provided to the user during the initial registrationprocess.

Alternatively, the FDA application can be mailed to the user. In thisembodiment, the installation processes similar to the PTDcellular/wireless ISP process. Alternatively, the FDA application can beinstalled at an Independent Sales Organization (ISO) or a retailer.

In a further embodiment, the FDA application can be transferred from onePTD that has an FDA application, to another PTD that meets the FDAapplication's minimum device specifications. In this instance, only theapplication, and not the personal user data or soft cards, will betransferred. The new user must then proceed with registration and softcard download using the methods described herein.

FIG. 8 is a table that lists examples of typical FDA application userpersonal data fields. These example fields include the user's name,address, and other information that is typically used in financialtransactions. The data corresponding to the user fields is maintained inan encrypted and secure database within the FDA application on the PTD,or other user computer and on server 60.

According to an embodiment of the present invention, the data associatedwith the user fields can be used as merchant Soft-Card data or bymerchant loyalty “plug-ins.” These features of the present invention arediscussed further below with respect to FIGS. 11 and 12. The merchantloyalty plug-ins are software modules that are made available to theuser, e.g. via server 60, and accessible by wireless ISP/cellularnetwork, the internet, and the merchant's network. The plug-ins areself-configuring, based upon the user's personal data and anyqualifications of the merchant. The plug-ins are described in FIG. 12,with download description in FIG. 11.

FIG. 9 is a table that lists examples of typical FDA application usertransaction data fields. These transaction data fields are typicallyassociated with time, amount, Merchant, limits, billing cycles,transaction approval codes, and other data associated with thetransactions routed from the card acquirer and clearing house to server60. The user can obtain this data after the transaction andconsolidation on server-based FDA application, with manual or automaticsynchronization, dependent upon user preferences.

According to an embodiment of the present invention, server-specificcode is appended to each transaction data field to consolidatetransactions, loyalty programs, merchant coupons, gift certificates, andother financial instruments. This server-specific code can includesecurity data for correlation with card issuer's security codes andsingle transaction authorization transaction codes.

FIG. 10 is a table that lists examples of typical FDA application userpreference data fields. These data fields are used for user-definedassociations between Merchants, Soft-Cards, Merchant/Buyer inPeer-to-Peer modes, and transaction amount levels, and forsynchronization with the User's computer and other User's otherauthorized FDA applications. This data is synchronized via IR signals,wireless ISP/Cellular networks, the internet, and network or PC cradleswith interconnect wires. The single-step and normal negotiated purchasepreferences, default Soft-Card preferences, auto-sequences forcollaborative Merchant negotiations regarding such items as preferredSoft-Card and transaction limits requiring a PIN/password are defined bythe User in this table.

The fields in FIG. 10 can be used by the embedded FDA application on theRF proximity cards, and other “smart” or “chip” cards. These RFproximity cards do not have an active user interface on the card.Therefore, the User has to define purchase preferences via the web orwireless carrier/ISP network that allow the embedded FDA application toauto-select the relevant card based upon collaborative negotiationsperformed by adapter 35 or PTD Peer-to-Peer collaborative negotiations.Alternatively, the RF Proximity card may obtain card data via avariation of adapter 35 that includes a magnetic stripe card swipedevice with ability to transmit this magnetic card data via the ISO/IEC14443 type A and B and the ISO/IEC 15693 RF induced field protocols.Further details of this type of adapter are discussed in U.S. patentapplication Ser. No. 10/428,910, filed concurrently herewith, to Khan etal., which is incorporated by reference herein.

According to a further embodiment of the present invention, the userpreference data controls the sequence of cards presented in negotiationswith a Merchant. For example, the User/Buyer may define the preferredsequence usage of card “A”, then usage of card “B”, and finally usage ofthe Merchant's card “C”. In this example, the Merchant may require theuse of their loyalty/member card to obtain certain discounts or loyaltyprogram benefits, that may be unknown to the Buyer, and the FDAapplication described herein will automatically sequence to theMerchant's preferred card, if the user preferences allow.

The Buyer's FDA application receives these Merchant's preferences andauto-sequences to the Merchant requirements, if allowed by the User'spreferences. This action enables the Buyer to obtain the Merchantloyalty/member benefits in a transparent transaction process. The Buyermay also be advised of the request to use the Merchant loyalty/memberpreferences. The Buyer always has control of the Soft-Card dataproffered. The Merchant always has control of the minimum requirementsfor the transaction. This reduces the Merchant's transaction risk, asdefined by the Merchant, and benefits the Buyer. Another advantage isthat the user may define spending limits associated with specific cardsand discount preferences associated with specific cards. In someinstances, a user can transfer purchases from a first card to a secondcard after the transaction.

FIG. 11 identifies examples of how an FDA (ViVOWallet) application (leftcolumn) and Soft-Card data (right column) can be downloaded onto a PTD.The FDA application and Soft-Card data can be downloaded by the PTD viaa PC cradle, disk module, memory module, CD-ROM storage media; MerchantIR or RF kiosk, Merchant or POS system, adapter 35 with application inresident memory, via a Merchant or ISO network server, direct fromserver 60 through cellular/wireless ISP network or API portal, via theUser's PC, or via PTD-PTD transfers with such mediums as IR and memorymodule.

The Soft-Card data can also be downloaded to the FDA application fromadapter 35. The Merchant/ISO can offer manual programming ofloyalty/member card data directly into the FDA application.Additionally, gift-cards that are prepaid can be transferred accordingto these identified processes.

The adapter 35 can acquire magnetic card data from the User's card andtransmit it to the User's FDA application. Adapter 35 can transferMerchant loyalty/member Soft-Card data directly to the FDA applicationthrough any suitable network.

FIG. 12 is a diagram of self-configuring merchant loyalty registrationprocesses. The steps shown in FIG. 12 are merely examples of steps thatcan be implemented according to particular embodiments of the presentinvention. The steps shown in FIG. 12 are not intended to limit thescope of the present invention in any way.

Examples of merchant loyalty programs are programs that providediscounts only available to members, such as frequent flier programs anddiner's club card programs.

According to the embodiments of the present invention illustrated inFIG. 12, a software plug-in module automatically registers a user of anFDA application with a merchant loyalty program. No direct humanintervention is required to register a user in a merchant loyaltyprogram, except some indication by the user that he or she desires amembership in the loyalty program. Because no other human interventionis required, merchant loyalty plug-in modules of the present inventionare self-configuring.

A plug-in module of the present invention accesses a user's personaldata from a user database, and automatically registers a user with amerchant loyalty program in response to a user's request for membershipin the loyalty program. A plug-in module of the present invention canensure that any qualifications required by the Merchant are meet beforea user is registered in the loyalty program.

A merchant loyalty plug-in module of the present invention can registera user with numerous merchant loyalty programs that are provided bymultiple merchants. Thus, a user can register with multiple merchantloyalty programs using the same familiar registration system that isconveniently provided through a user's cell phone, PDA, personalcomputer, or other user device.

Merchant loyalty plug-in modules of the present invention can run onserver 60, a user's PTD, a user's PC, or on a merchant computer system.The merchant computer system can be located, for example, at an attendedor unattended merchant kiosk. The merchant computer system can be incommunication with the merchant point-of-sale (POS) system. As discussedabove, the merchant POS system can include adapter 35. The plug-inmodules can be accessible by a wireless ISP/Cellular network, theinternet, or via the Merchant's network.

Three example processes for automatically registering a user in amerchant loyalty program are described in FIG. 12. According to thefirst embodiment, a plug-in module operating on server 60 automaticallyregisters a user in a merchant loyalty program as shown in steps1210-1214. According to the second embodiment, a plug-in moduleoperating on a merchant system automatically registers a user in amerchant loyalty program as shown in steps 1220-1223. According to thethird embodiment, a plug-in module operating on a user deviceautomatically registers a user in a merchant loyalty program as shown insteps 1230-1234.

In step 1210/1220/1230, a user computing device (e.g., PC, PTD, etc.)provides the user with an opportunity to enroll in a merchant loyaltyprogram. The user then selects a particular merchant loyalty program. Inone embodiment, the user's device requires the user to log into anaccount maintained by server 60 before the user can select a merchantloyalty program.

The user can indicate a desire to enroll in a merchant loyalty programby actively selecting an option on a user interface screen on the usercomputing device. For example, the user can initiate or confirm arequest to register in a specific merchant loyalty program that isdisplayed and offered by server 60 or the user's PTD. The user's requestcan be transmitted as an electronic message to server 60 or a merchantcomputer system.

In another embodiment, a user can request to enroll in a merchantloyalty program during a purchase transaction. In this embodiment, amerchant point-of-sale computing system can send an electronicnotification to the user computing device during the purchasetransaction asking the user whether wants to enroll in a particularmerchant loyalty program. The user can indicate a desire to enroll inthe loyalty program by sending an electronic message back to themerchant system to obtain a discount or other benefit for the purchasetransaction that is presently being conducted.

Alternatively, a user can define a user preference that indicates theuser wants to register in all merchant loyalty programs of a certaintype (or any type) that he is eligible to register in. A merchantloyalty plug-in module then automatically registers the user in merchantloyalty programs that fall into the categories selected by the user.

According to one embodiment, a plug-in module can automatically registera user with a loyalty program when the user purchases an item from amerchant. For example, a PTD can automatically send a request to amerchant point-of-sale system to initiate the user's registration in amerchant loyalty program during a financial transaction in response to auser's predefined preference. As another example, during the purchasetransaction, a merchant point-of-sale system can send an electronicmessage to the user's PTD requesting that the user enroll in a merchantloyalty program. The PTD can respond to the request by sending anelectronic message to the merchant's point-of-sale terminal indicatingthe user's intent to join the merchant loyalty program. The electronicmessage includes at least some of the data pertaining to the userprofile and all the information necessary to enroll the user in themerchant loyalty program. A financial transaction is then conductedthrough the merchant point-of-sale system using a user account. The userreceives credit for the financial transaction in the merchant loyaltyprogram.

At step 1211/1221/1231, the merchant loyalty plug-in module receivesuser data and processes the user's membership application to themerchant loyalty program. The plug-in module can receive the user data,for example, by automatically accessing the user's profile data from auser profile database. The user profile data can include, for example,the user's name, address, a user's preset preferences, accountinformation relating to particular soft cards or bank accounts, ahistory of the user's transactions, and any other useful information.The user profile database can be stored at any suitable location (e.g.,at server 60) and is in secure communication with the user device and/orthe merchant computer system.

The plug-in module can processes the membership application byautomatically filling out an electronic application form. The plug-inmodule can fill out a form by automatically entering user data into theappropriate fields of the membership application form. Each piece ofuser data in the user profile database can be associated with aparticular data type or data field (such as a user name, user address,user soft card accounts). The plug-in module matches the form fieldswith the user profile data types and fills in the forms with theappropriate user profile data types.

The plug-in module checks all of a merchant's requirements to enroll ina loyalty program. For example, a merchant can require that a user hasconducted a certain number of transaction with that merchant before theuser is allowed to enroll in the loyalty program. As another example, amerchant can require that a user have a certain minimum credit ratingbefore he is allowed to enroll in a loyalty program. As another example,a merchant can require that a user supply his social security number. Ifthe user's social security number is not stored in the user database,the user device can request the user to enter it. The plug-in modulechecks that all of these requirements are met before the user isenrolled in the loyalty program.

The merchant computer system can generate a list of unique membershipnumbers that can be assigned to new merchant loyalty accounts. Theseunique numbers are transmitted to merchant loyalty plug-in modulesoperating on server 60, a user device, or a merchant computer system.

The plug-in module then generates a new merchant loyalty membershipaccount for the user including a unique membership number, a merchanticon, account set-up, and other soft card data. The plug-in module thentransmits new merchant loyalty account data to the merchant issuerincluding the new account number, information identifying the user, andany other information requested by the merchant at step 1212/1232.

At step 1213/1222/1233, the merchant icon and the loyalty membershipdata including the member number is then transmitted to and stored onthe user device. The user device can prompt the user to see if the userwants this data downloaded. Alternatively, the data is automaticallydownloaded to the user's device. If the plug-in operates on the userdevice, then the data is merely created and stored locally.

The merchant loyalty membership data can be securely stored in theuser's device using encryption or other well known data securitytechniques. The FDA application can require that a user enter a PIN orpassword before the user can access the merchant loyalty soft card orany merchant loyalty benefits.

At step 1214/1223/1234, the user conducts a purchase transaction fromthe user device using the merchant loyalty program account. The userauthorizes the FDA application on the user device to share the merchantloyalty soft-card data. The FDA application can share the soft card andother merchant loyalty data with a participating merchant to obtain themerchant loyalty benefits or any other authorized device. The soft-carddata is concurrently maintained in a secure encrypted file on server 60and on the user device.

Merchant loyalty plug-ins make it easy for users to sign-up for loyaltyprograms. Users merely have to indicate a desire to enroll in a merchantloyalty program and satisfy all of the merchant's requirements for theprogram. The rest of the process is transparent to the user.

A merchant loyalty plug-in module of the present invention can maintainusers' merchant loyalty membership accounts. For example, a plug-inmodule can keep a record of a user's transactions that involvemembership cards for a variety of purposes. For example, certain extrabenefits can be provided to a user based on dollar amounts ofmerchandise purchased using a merchant loyalty card. A plug-in modulecan transmit updated data relating to the merchant loyalty accounts tomerchants and users automatically or upon request.

A user can also download a merchant loyalty plug-in module to his PTD orPC. User merely selects a desired plug-in from a user interface (e.g., aweb page) on the FDA application. The plug-in is then downloaded via awireless ISP/Cellular network, the interne, or the Merchant systemsnetwork. The plug-in self-configures itself on the user's PTD andaccesses the User's personal data. Cross-referencing between plug-inmodules can also be effected to validate any cross-Merchant loyaltyprograms such as airline purchases and food discounts.

FIG. 13 is a flow chart that illustrates the interface processes betweenadapter 35 and the FDA application. The process of FIG. 13 includestransparent transaction processes such as security and automatic pollingof the Buyer's FDA application by the Merchant POS system.

If the polling feature of adapter 35 is ON (decisional step 1415),adapter 35 periodically transmits a transponder signal to a PTD at step1417 and waits for a response. The transponder signal may conform to ISO14443 Type A or Type B, IR type IrDa and ViVOtech Inc. proprietary andConsumer IR, Bluetooth, IEEE 802.11(b), and cellular/wireless ISPprotocols.

If adapter 35 determines that a response is received at decisional step1465, adapter 35 performs mutual device authentication and challengeprotocols at step 1470. If the device authentication is validated atdecisional step 1471, adapter 35 generates encryption codes andexchanges security routines, certificates, and/or keys with the PTD atstep 1480, and then waits for the transaction start code at step 1485.If a response is not received before time-out, the adapter routinereturns to step 1417.

If a response is received before time-out, adapter 35 waits for an FDAapplication start sequence at step 1420. When the start sequence isreceived from the PTD at step 1425, adapter 35 and the FDA applicationcheck to see if the devices are mutually authenticated within aspecified period of time at step 1430.

If the devices are not mutually authenticated, adapter 35 requestsre-authentication protocol procedures at step 1432 and may return tostep 1420 or step 1430 if the devices are not authenticated.

Mutually authenticated devices initiate security encryption proceduresand generate encryption codes and exchange cipher keys. Once mutualauthentication protocols are confirmed, the FDA application transmitsuser-specific data to adapter 35 at step 1440. Adapter 35 confirms thecard data is valid at step 1445, for example, via cyclic redundancycheck (CRC), linear redundancy check (LRC), or similar method of dataintegrity verification. If adapter 35 is unable to confirm the validityof the card data within a specified number of attempts, an error messageis transmitted to the FDA application at step 1447, and the transactionprocess is terminated.

If the card data is validated, adapter 35 transmits the digital data toinductor simulacrum 15 at step 1450 for inductive transfer to the POSmagnetic card acceptance system device magnetic head component. Adapter35 then transmits merchant-specific code information to the FDAapplication at step 1455. Adapter 35 can transmit a confirmationrequest. The transaction is then terminated.

A benefit of the process of FIG. 13 is that many steps of the processare transparent to the User. For example, an RF card can complete theprocess of FIG. 13 without any input from the Buyer, other than theBuyer submitting the card to adapter 35 for the required period of time.The Buyer can define or change the level of interaction that is requiredto complete the process. Adapter 35, the cellular wireless/ISP operator,or other network or device can determine if any password or other formof authentication is required.

FIG. 14 is a diagram that illustrates examples of collaborativenegotiation techniques that attempt to accommodate both a buyer's and amerchant's preferences according to embodiments of the presentinvention. A user of a user device is typically a buyer in the financialtransactions described herein.

Buyers and merchants can set predefined preferences that are designed toregulate a financial transaction involving these parties. Thepreferences are predefined in the sense that they are defined by theuser or merchant before the financial transaction is initiated. When abuyer and a merchant have preference settings that are different,collaborative negotiations are performed to accommodate each party'spreferences so that a purchase transaction can be completed.

When a financial transaction is initiated, a user preference and amerchant preferences are accessed, and a negotiated preference isgenerated that accommodates both the user preference and the merchantpreference. If the user preference and the merchant preference are notmutually exclusive, the negotiated preference attempts to satisfy bothpreferences. If the user preference and the merchant preference aremutually exclusive, the negotiated preference satisfies at least one ofthe two preferences based on which of the two preferences has a higherpriority. The financial transaction is conducted based on the negotiatedpreference.

The negotiation process includes many different variations. In oneembodiment, a merchant preference supersedes a buyer preference when themerchant preference has a higher priority. For example, a Merchant canrequire a Buyer to use a loyalty or member card to get a specialdiscounted purchase price.

In other instances, a buyer preference supersedes a merchant preferencewhen the buyer preference has a higher priority. For example, a buyercan require that a certain soft card be used with a transaction,regardless of a merchant's preferences. A buyer can also have presetspending limits for certain soft cards that a merchant cannot override.

The merchant computer system can query the buyer's user device regardinghis purchase preferences. As an example, the query can cause the Buyer'sFDA application to display the Merchant's loyalty or member card. Asanother example, the query can cause the FDA application to display adefault card or some other card previously indicated by the user'spreferences. As yet another example, the query from the Merchant systemcan cause the FDA to query the Buyer/user to select a purchase option orSoft-Card.

By collaboratively negotiating with the Buyer using an electronictransactional system of the present invention, a Merchant can reduce itsrisk by setting its own transaction limits for PINs and passwords and byindicating their preferred or accepted card(s) to the user's FDAapplication.

An additional advantage of the present invention is that a Buyer canpurchase items and receive the benefit of loyalty and member programswithout being interrogated by the POS service staff. Additionally, anyloyalty awards, discounts, and coupons are submitted by the Merchantdirectly to the Buyer's FDA application for present or delayedconsolidation and application, or to server 60 for post-transactionprocessing for benefit of the Buyer.

The first column in FIG. 14 illustrates examples of a merchant'spreferences relating to collaborative purchase transactions. The secondcolumn in FIG. 14 illustrates examples a buyer's preferences relating tocollaborative purchase transactions. The third column lists negotiatedpreferences that accommodate the buyer's and the merchant's preferences.

FIG. 14 illustrates several examples of buyer preferences and merchantpreferences that can be set according to various embodiments of thepresent invention. A buyer and a merchant can set preferences thatregulate transactions. For example, a buyer and a merchant can setpreferences that indicate preferred soft-cards to be used intransactions.

Specifically, merchant preference 1501 indicates that the merchantprefers that a buyer use card A. However, the merchant accepts card B ifthe buyer cannot or will not use card A. The buyer's preference 1502indicates that the buyer prefers card B. Because of the differencebetween the merchant and buyer preferences, the FDA application and themerchant system implement a negotiated preference. The negotiationsprocess is preferably based on preset criteria and is transparent to thebuyer. In the example negotiated preference 1503, card B is used toconduct the transaction, because merchant preference 1501 is set toaccept card B.

As another example, a merchant preference 1504 requires that a buyer usea merchant's loyalty/member card to obtain certain discounts or loyaltyprogram benefits. This requirement may be unknown to the Buyer. TheMerchant's system sends a notification to the Buyer's user deviceidentifying the loyalty card requirement. The FDA application receivesthe Merchant's notification and examines the buyer's correspondingpreferences. The buyer's preference 1505 has not authorized the FDAapplication to use the merchant loyalty card. Because of the potentialconflict between merchant and buyer preferences, the FDA applicationrequests the buyer's authorization to use the merchant loyalty cardaccording to negotiated preference 1506. If the buyer does not authorizeuse of the loyalty card, the buyer does not get the benefit of themerchant's discount or benefit.

This embodiment enables a buyer to obtain a merchant loyalty/memberbenefits in a transparent transaction process, and advises a buyer of arequest to use a merchant's preferences. The buyer has control of thesoft-card data proffered, and the Merchant has control of the minimumrequirements for the transaction. This process reduces the merchant'stransaction risk, as defined by the merchant, and benefits the buyer.

In another embodiment, the FDA application can automatically proffer asoft-card in response to a request from a merchant to use a specificcard in a particular transaction. For example, an RF proximity card canknow that Macy's prefers the Macy's card and can send the Macy's cardupon interrogation, unless the buyer has preferences to the contrary.

As another example, a merchant sets a preference 1507 to use any cardfor purchases or transactions of any amount. A buyer has set preferences1508 that define specific dollar amount limits for transactionsconducted using each of the buyer's soft cards. The negotiatedpreference 1509 implements both the buyer and the merchant preferencesby automatically selecting a soft card after the user inputs an amountof the transaction. The selected soft card has a user set transactionlimit that is greater than or equal to the transaction amount. If noneof the user's soft cards have a large enough transaction limit, the useris prompted to select a soft card and to waive its transaction limit.Otherwise, the transaction is terminated.

As another example, a merchant sets a preference 1510 to require a buyerto enter a pre-stored string such as a personal identification number(PIN) or a password to complete transactions for dollar amounts that aregreater than X dollars. A buyer has set a preferences 1511 to requirethat the buyer enter a pre-stored string such as a PIN or a password tocomplete transactions for dollar amounts that are greater than Ydollars. In this example, Y dollars is greater than X dollars. Accordingto the negotiated preference 1512, the FDA application requires that thebuyer enter a pre-stored string for transactions that are greater than Xdollars before allowing a transaction to proceed. Negotiated preference1512 satisfies both the merchant and the buyer preferences 1510 and1511.

As yet another example, a merchant sets a preference 1513 to require abuyer to enter a pre-stored string such as a personal identificationnumber (PIN) or a password to complete transactions for dollar amountsthat are greater than X dollars. A buyer has set a preference 1514 torequire that a pre-stored string such as a PIN or a password be enteredto complete transactions for dollar amounts that are greater than Ydollars. In this example, X dollars is greater than Y dollars. Accordingto the negotiated preference 1515, the FDA application requires that thebuyer enter the pre-stored string for transactions that are greater thanY dollars before allowing a transaction to proceed. Negotiatedpreference 1515 satisfies both the merchant and the buyer preferences1513 and 1514.

As yet another example, a merchant sets a preference 1516 that indicatesthat the merchant offers certain coupons only after a transaction iscompleted. The buyer preference 1517 indicates that the buyer desires touse coupons for transactions. Preference 1517 can be specific toparticular types of coupons, particular merchants, or particular typesof transactions such as purchases of clothes. If the buyer's couponpreferences are compatible with the merchant's coupon, the coupons arereconciled after the transaction and funds are credited for thetransaction according to negotiated preference 1518.

The Merchant can also have preferences that relate to other types oftransaction level authorizations. The Merchant's preferences may alsorequire personalized data such as a Merchant's name and POS systemadapter serial numbers that are programmed and used for collaborativenegotiations with the Buyer's preferences.

FIG. 15 illustrates flow charts for typical FDA application purchaseprocesses. The steps shown in FIG. 15 are merely examples of steps thatcan be used in these processes and are not intended to limit the scopeof the present invention. Some of the steps shown in FIG. 15 can beomitted, and other steps not shown can be added.

The processes of FIG. 15 can be implemented as single-step or negotiatedpurchase processes. The negotiated merchant-buyer collaborativetransactions shown in FIG. 14 are examples of negotiated purchaseprocesses. In a single step transaction process, a buyer can purchaseone or more items of merchandise (or services) with a single selectionon the user device to complete the transaction.

In step 1551, the user's preferences are stored on the user device(e.g., PTD or PC). The user preferences can include the dollar limitsfor specific cards or types of transactions. The user device receives arequest from the user (buyer) to conduct a transaction at step 1552. Theuser can initiate a transaction by selecting an option on the userdevice. A purchase authorization is then effected between the FDAapplication and the merchant point-of-sale system (which can includeadapter 35).

At step 1553, the buyer selects a payment soft card. The buyer'sfinancial soft card data and order data are sent to the merchantpoint-of-sale system at step 1554. The order can, for example, includean identification of an item or service that the user desires topurchase. If the transaction parameters satisfy the merchant'spreferences, the merchant approves the transaction at step 1555.

The merchant then transmits the financial data to a clearing house forauthorization to debit one of the user's account at step 1556. Theclearing house can, for example, regulate user credit card accounts. Themerchant POS system processes the transaction when authorization isreceived from the clearing house at step 1557. Transaction data is thensent to the user device at step 1558. This transaction data can includea confirmation code for the transaction, which can be used to redeemcoupons or other items at a later time.

The techniques of the present invention utilize normal clearing houseapproval processes. The Merchant can enter the amount of purchase intothe POS system, and the Buyer can accept the transaction at the FDAapplication. Off-line transactions are also supported by the use oftokens. In this instance, the Buyer can purchase tokens from the server60, or such entities as PayPal™, and they will be applied to theparticipating Merchant. Peer-to-Peer transactions, described in FIG. 18,are supported for mobile vendors using the FDA application in theMerchant mode.

An alternative embodiment of the present invention is a “Micropayment”process. In this embodiment, the Merchant establishes a collections andpayment account with the cellular/wireless ISP operator. The Merchantconfigures its POS adapter or FDA application operating in Merchant Modewith the relevant cellular/wireless ISP Merchant assignment data.

The normal purchase process described herein is executed. If the Userand Merchant collaborative negotiations result in approval of aMicropayment process that meets any predefined credit/debit/prepaidlimits, the financial transaction is applied to the cellular/wirelessISP operator. Debt for the transaction is assign to the Buyer'scellular/wireless ISP account for the benefit of the Merchant'scellular/wireless ISP account. The Buyer will makes payment uponperiodic billing by the cellular/wireless ISP. The maximum cumulativeMicropayment amount is determined by the cellular/wireless ISP creditagencies. Additionally, prepaid coupons or tokens can be used withPay-Pal, server 60, or similar third party transaction processors.

FIG. 16 is a flow chart that illustrates examples of FDA applicationpurchase processes at attended point of sale (POS) adapters. FIG. 16illustrates steps in three columns. The first column identifies actionsassociated with the Buyer. The second column identifies actionsperformed by the PTD. The third column identifies actions performed bythe Merchant's adapter 35.

The PTD and adapter 35 mutually authenticate and establish a transactionsession. This session may, for example, include IR Object Exchange andIrDA and IrFM protocols exchange upon meeting the proximity requirementsfor the specific PTD radio frequency or infrared signals. IrDA standsfor Infrared Device Association, which is a standards agency for aspecific type of IR based communications, popular with communicationsdevices. IrFM stands for Infrared Financial Messaging, a protocol forfinancial transactions established by the IrDA. A payment request istransmitted by adapter 35, and Merchant data is transmitted to theBuyer.

The Buyer's FDA application transmits the payment transaction request tothe Merchant's adapter. A transaction code is generated by the PTD FDAapplication and adapter 35 upon confirmation by the transactionauthorization center, or clearing house. The product or service is thenprovided to the Buyer. The transaction is reconciled and settlementactions completed by server 60, with notification to the FDAapplication, and posted on the User's server-based FDA application.

Alternatively, two distinct FDA applications may be configured inMerchant and Buyer modes. In this instance, the Buyer or Merchantinitiates the transaction request. Processes similar to the ones shownin the figures are performed to establish mutual authentication, securedata communications, and transaction event logging.

In the on-line mode, the Merchant's adapter authenticates and authorizesthe transaction via server 60. Transaction data is then transmitted tothe Merchant and the Buyer. In off-line transactions, tokens issued byserver 60 can be used. Reconciliation of the tokens to the Merchant canbe effected in near real-time.

The benefit of the use of tokens is that transactions can be effected inareas not covered by cellular/wireless ISP signals such as in cars, inbuildings, or outside of metropolitan areas. Such users will includetaxi drivers, circus agents, door-to-door salesmen, street vendors, andany mobile Merchant with an established collections account with theserver 60, Pay-Pal, cellular/wireless ISP, or other third party service.

An alternate embodiment of the present invention is the ability of theFDA application and Merchant POS adapter to generate dynamic CVCCsecurity codes for new magnetic Track #2-like Soft-Card data. The CVCCcode is typically written on the back of existing magnetic stripe cardsand is used for card-not-present authentication and on-line internetpurchases. Card-not-present purchases are done at distance where thecard is not scanned through a magnetic card acceptance system.

A benefit of the use of dynamic CVCC Track #2 code generation is thesecurity of single-purchase authorizations whereby the code is be used afinite period of times, typically once, and changed. The dynamicgeneration/assignment of this CVCC code will reduce fraud, identitytheft, and other unauthorized usage of Soft-Card data and reduce lossesto the credit/debit/ATM/loyalty/prepaid/member card industry.

Another embodiment of the present invention is the application of the“Micropayment” process. One possible example of this embodiment is nowdescribed. According to this example, the Merchant establishes anaccount with the cellular/wireless ISP operator. The Merchant configuresthe POS adapter or the FDA application operating in Merchant Mode withcellular/wireless ISP Merchant assignment data. A standard purchaseprocess is executed with a user from a PTD or PC.

If the User and Merchant collaborative negotiations result in approvalof a Micropayment process, a cellular/wireless ISP operator appliescredits and debits related to a financial transaction to the appropriateparties using accounting and reconciliation-on-behalf-of-othersprocesses. Debt for the transaction is assigned to the Buyer's accountfor the benefit of the Merchant's account. The Buyer then makes payment,for example, upon periodic billing. The payments funds are transferredor paid to the Merchant's account and benefit. The maximum cumulativeMicropayment amount can be determined by the cellular/wireless ISPcredit agencies.

FIG. 17 is a flow chart that illustrates examples of FDA applicationpurchase processes at unattended point of sale (POS) adapters.Unattended adapters can be found, for example, in vending machines andgasoline dispensing machines. FIG. 17 illustrates six sets of steps inthree columns. The first column identifies actions associated with theBuyer. The second column identifies actions performed by the PTD. Thethird column identifies actions performed by the Merchant's unattendedadapter 35.

According to the first set of steps in FIG. 17, the Buyer decides topurchase a product, the Buyer's PTD has the FDA application resident andoperating, and the Merchant's adapter is installed and operating. In thesecond set of steps, the PTD and adapter mutually authenticate andestablish a transaction session when within range. This session caninclude IR Object Exchange and IR Device Association and IR FinancialMessaging protocols exchanged and described herein upon meeting theproximity requirements for the specific PTD.

In the third set of steps in FIG. 17, a payment request is transmittedby the adapter 35, and Merchant data is transmitted to the Buyer. TheBuyer's FDA application transmits the payment transaction request to theMerchant's adapter. A transaction code will be generated by the FDAapplication and adapter 35 upon confirmation by the transactionauthorization centers, or clearing house, in the fourth set of steps.The product or service is provided to the Buyer in the fifth set ofsteps. The transaction is reconciled and settlement actions completed byserver 60 with notification to the FDA application, and posted on theUser's server-based FDA application in the sixth set of steps.

Alternatively, two distinct FDA applications may be configured asMerchant and Buyer modes in a peer-to-peer transaction, as discussedabove. In this embodiment, the Merchant as well as the Buyer conductsthe transaction through a PTD.

Examples of unattended Merchant POS adapters 35 include vendingmachines, gas pumps, student cafeteria services, and other machines. Themachines will have internet, local area, or cellular/wireless ISPnetwork connections for on-line transaction authorization and clearinghouse approvals. The Merchant POS adapter-enabled machines can alsoaccept payment tokens, prepaid tokens, gift certificates, loyaltyprogram tokens, and Micropayments.

Tokens allow transactions to be effected in areas not covered bycellular/wireless ISP signals such as in cars, in buildings, or outsideof metropolitan areas. Token users can include taxi drivers, circusagents, door-to-door salesmen, street vendors, and any mobile Merchant.

FIG. 18 is a flow chart that illustrates an embodiment of a Peer-to-Peertransaction process between FDA applications. The process of FIG. 18enables two distinct FDA applications to establish a Merchant-Buyerconfiguration for transferring data as with many of the embodimentsdiscussed above. According to this embodiment, two distinct FDAapplications can conduct financial or token transactions, transferSoft-Card data, transfer gift certificates, conduct inter-devicesynchronization upon User authorization, and transfer FDA softwareapplications. One FDA application on a first user device can alsotransfer a merchant loyalty plug-in module to a second FDA applicationon a second user device in a peer-to-peer transaction.

The two FDA applications are set in Buyer and Merchant mode (steps 1801and 1802) and are mutually authenticated (steps 1803 and 1804). Asecurity session is established (steps 1805-1806), and the Merchanttransmits a transaction cost to the Buyer (step 1808). The Buyerreceives the transaction cost (step 1807) and selects a mutuallyagreeable transaction medium (steps 1809) such as tokens, a Soft-Card, aloyalty card, a micropayment, a gift certificate, or a member card. TheBuyer then transmits this medium data after entering a PIN/password. TheMerchant receives the payment (step 1810) and processes the paymentaccording to the general methods described above. The Buyer receives atransaction reference code that can be used for reconciliation of thetransaction with server 60 (step 1811). The Merchant receives atransaction authorization from a clearing house and receives money ortokens in its account at step 1812.

Transaction data is synchronized with server 60. Reconciliation andsettlement occurs within normal card issuer billing periods. After theBuyer or the Merchant initiates the transaction request, processes occurto establish mutual authentication, secure data communications, andtransaction event logging as discussed above.

FIG. 19 is a functional diagram and FIG. 20 is a component diagram.FIGS. 19 and 20 illustrate the physical devices and systems that can beutilized to implement embodiments of the present invention. Thesedevices and systems integrates a PTD, such as PDA 30 or cell phone 40,with the wireless carrier/ISP data communications network 66, theinternet-based server 60, the internet-based user's PC 99, theMerchant's adapter 35, and a card issuer acquirer 92. In addition,server 60 may have an applications program interface (API) hook into thewireless carrier/ISP, enabling wireless network communications withserver 60. Additionally, the integration of a cellular communicationsdevice into adapter 35 enables remote communications with the PTD, PC,internet, transaction authorization centers, and the cellularwireless/ISP carrier for such actions as transaction processing,authorization, reconciliation, settlement, event logging, and otheractions described herein.

Adapter 35 can communicate with an RF card via inductive coupled RFtransceiver. Adapter 35 can communicate with cell phone 40 and PTD/PDA30 Via IR, Bluetooth, IEEE 802.11(b), SMS or the wireless carrier/ISPnetwork 66. PTD/PDA 30 can communicate via direct cable with the user'sPC 99 or through cellular/wireless ISP provider 66. PC 99 cancommunicate with the PTD/PDA/cellular phone via a manufacturers cradle.PC 99 can communicate with server 60 via the internet. Server 60 cancommunicate with the Issuer/Acquirer 92 via the internet to obtainfinancial data and Merchant loyalty and member program Soft-Card data.PC based FDA application can communicate with adapter 35 via theinternet and the wireless carrier/ISP network 66.

A benefit of this functional design is the integration of, IR, and RFtransceiver equipment such as Bluetooth or IEEE 802.11(b) andcellular/wireless ISP networks into a single device that is permanentlyinstalled in the legacy magnetic stripe card acceptance systems.

Another benefit of the transaction processes of the present invention isthe ability of the user to effect a “card-present” financial transactionvia near-proximity infrared or by wireless carrier/ISP networks andwithout presentation of the actual magnetic card. This is a low risktransaction that is effected via security and authentication protocolsand procedures. A “card-present” transaction will result in lower riskassignment by the card issuers and resultant lower transaction fees,Merchant qualification, and Merchant risk.

Another benefit of the transaction processes of the present invention isthe capability of an adapter 35 to temporarily store/cache the magneticcard data introduced to the POS magnetic card acceptance system and thentransmit this data to the user's PTD via infrared medium, or via RFproximity card protocols. Mutual authentication between card data andthe user's PTD is required to ensure only magnetic card data assigned bythe issuer to the user is captured and transmitted to the use's PTD vianormal secure communications methods. Alternatively, the capturedmagnetic card data is transmitted via wireless carrier/ISP, SMS, andinternet, or by normal surface and air mailing methods.

The transaction processes of the present invention are alsoadvantageous, because these processes allow the user's cards to beaggregated and stored on a PTD and/or a PC. This aggregation providesusers with greater convenience and greater security. The greatersecurity is achieved through card data encryption measures and by nottransporting the physical cards.

Many other configurations of adapter 35 and its associated equipment arewithin the scope of the present invention. For example, a PTD devicewith wireless network capabilities, an integrated infraredcommunications device, or other communications system can be used tocommunicate with an adapter 35. In addition, a Buyer's mobile PC system99 can have an FDA application with the features discussed above thatcommunicates with an adapter 35 to conduct transactions. PC 99 cancommunicate with adapter 35 and server 60 via the internet and wirelesscarrier/ISP.

According to a further embodiment of the present invention, adapter 35is coupled to a user's PC for on-line purchases with a card. In thisembodiment, the user first presents the card to adapter 35. Secure datais then transferred to the PC-based FDA application for securetransmission to the internet-based purchaser.

According to further embodiments of the present invention, otherPTD-based FDA software applications can communicate with adapter 35.

According to still further embodiments of the present invention, the FDAapplication can be remotely located on the wireless carrier/ISP server66 and/or server 60. In this embodiment, the FDA application can beremotely controlled by the Buyer's cell phone. Passive and activedevices can also communicate with the FDA application. For example, carand home alarms can communicate via IR or RF with code strings storedwithin an FDA application.

Coalition Card

One specific application for which embodiments in accordance with thepresent invention are particularly suited, is in use of “coalition”cards at point of sale devices. Briefly, a “coalition” card is a smartcard storing multiple types of account numbers for the same user.

For example, a first type of number stored on a coalition card maydesignate an general credit or debit account, as typically associatedwith a magnetic stripe card issued by AMERICAN EXPRESS, VISA, DISCOVER,and MASTERCARD. A financial transaction involving such a general usecredit/debit account is “open-loop”, in that it utilizes a global,large-scale infrastructure administered by a credit card company such asreferenced above.

A second type of number stored on a coalition card may be for an accountspecific to other than a financial institution, for example a particularmerchant or a coalition of merchants. Coalition cards may be used toconduct financial transactions with a member of a coalition directly,without an intervening open loop credit card processing or ATM network.A financial transaction involving an account of the second type is“closed-loop”, in that it utilizes a localized, smaller scaleinfrastructure administered by the sponsoring entity such as themerchant coalition.

A coalition card may thus be characterized as a PTD in the form of an RFproximity chip card, which stores data of a plurality of Soft-Cards inthe form of the at least the two different account types. These twodifferent account types may be pre-loaded onto the coalition card priorto issuance to a cardholder.

Accordingly, embodiments of the present invention may be employed toallow a merchant to recognize and use coalition cards, without having toimplement a costly new infrastructure. FIG. 21 shows a simplifiedschematic diagram of an embodiment of a system 2100 for such a coalitioncard-specific application in accordance with the present invention.

RF proximity chip card 2102 includes two different pre-loaded data types2104 and 2106. First data type 2104 comprises information for aplurality of general financial accounts 2105 a-c, correspondingrespectively with conventional magnetic stripe credit, debit, and ATMcards. Data type 2104 includes specific codes 2107 which may designatethe data type and the type of particular account that is represented.

RF proximity chip card 2102 also includes second data type 2106comprising information for a plurality of accounts other than thoselisted above. For example, second data type 2106 may include informationfor a plurality of accounts 2109 a-c relating to members of merchantcoalition(s). Data type 2106 includes specific codes 2111 flagging thecoalition and the member of the coalition.

FIG. 21 also shows a point-of-sale device including a contactless RFproximity chip card reader 2120. In the specific embodiment shown inFIG. 21, card reader 2120 is in electronic communication at the point ofsale with a module 2121 including processor 2122. In alternativeembodiments, the processor may be housed directly in the reader.Processor 2122 is configured to receive data from card 2102, and torecognize data types 2104 and 2106 present thereon.

Based upon data types received and recognized from the coalition card,the processor is configured to negotiate a particular financialtransaction with the card holder according to preferences, as describedin detail above. For example, as shown in FIG. 22, when the coalitioncard 2102 is presented at a point of sale, the reader and the card cancollaborate in a series of queries to determine the account to be usedfor that particular transaction and for that particular location. Theprocessor may recognize and honor both a transaction type of theopen-loop variety, and a transaction type of the closed-loop variety.Accordingly, the processor may be configured according to userpreferences or merchant preferences, or a combination of both merchantpreferences and user preferences, to automatically employ theclosed-loop account data over the open-loop account data, querying thecardholder to manually override this default setting. Such a manualquery is optional, however, and in accordance with other embodiments thetransaction type could be decided by collaboration according topredefined preferences stored in the card and/or reader, withoutrequiring manual action by the cardholder.

Based upon codes recognized from the card, and cardholder responses toqueries posed by the reader, the processor can route the financialtransaction information to the appropriate transaction processingsystem. Thus where data of the second type is not found, or where thecardholder accepts the reader's offer to manually select theconventional credit card account, the processor would be configured toroute data from the card to one of the global, “open-loop” transactionprocessing networks 2165 and 2167 in the conventional manner.

Conversely, where the coalition data type is recognized from the card,and the cardholder declines the offer to manually select theconventional open-loop credit/debit/ATM account, the processor isconfigured to route data regarding the transaction to central server2130. In accordance with one embodiment, the central server can be adirect part of the localized, closed-loop transaction processinginfrastructure 2132. In this embodiment, the central server can thusprocess the transaction directly, matching up the data transmitted bythe reader with a database 2134 correlating cardholder with a particularmember of the coalition.

According to an even more useful embodiment, however, central server2130 can be administered by a third party (such as ViVOtech), engaged bymultiple coalitions to assist in implementing their specific closed-looptransaction processing infrastructures 2140 and 2142. Under thisalternative embodiment, central server 2130 references codes transmittedfrom the reader with database 2134 to match up the transmitted data to aparticular coalition infrastructure 2140 or 2142. Moreover, as thesecond data type may include a plurality of numbers designatingdifferent members of a coalition participating in the closed-looptransaction processing, processor 2122 and central server 2130 are alsoable to recognize transactions relating to particular members of aspecific coalition for completion of the transaction.

The embodiment just described eliminates the need for each coalition toestablish an entirely separate infrastructure for administering theirprogram, allowing the third party to assume these duties. The thirdparty can in turn reduce the costs associated with such programmanagement, by contracting with a plurality of coalitions to performthis function.

The processor may employ different approaches to route transactioninformation along the appropriate pathway. In accordance with oneembodiment, a switch 2160 may be controlled by the processor to routeinformation to the central server. In this embodiment, detection of thesecond data type and the absence of a manual override by the user willresult in the switch being configured to route information along theclosed-loop pathway. In the absence of the specific conditions justenumerated, the processor may configure the switch to route thetransaction along the open-loop pathway.

According to an alternative embodiment, no switch is used and theprocessor is configured to encode outgoing information transactioninformation with additional information permitting downstreamrecognition of the particular account type. For example, transactiondata modified and forwarded by the reader to a common communicationchannel 2180 shared by the open- and closed-loop processing systems mayinclude a code recognized only by the closed-loop system(s). Theopen-loop system(s) ignore the transaction data, which is recognized bythe closed loop system(s) for processing.

FIG. 22 is a simplified flow diagram of a method in accordance with anembodiment of the present invention showing steps of using acoalition-type card. In a first step 2202 of method 2200, a POS readerdevice detects whether a coalition card is being offered by a user as apayment vehicle for a transaction.

If use of a coalition-type card is not detected in step 2202, theremainder of the transaction is routed to an open-loop infrastructurefor execution. If use of a coalition-type card is detected in step 2202,in a second step 2204 the system checks to see if there is a merchantpreference for conducting the transaction over a closed- or open-loopnetwork. In a third step 2206, the system checks to see if there is acardholder preference for conducting the transaction over a closed- oropen-loop network. Based upon any detected merchant or cardholderpreferences, the POS device routes the transaction to the appropriateopen- or closed-loop network. In an optional step 2208, the POS devicemay manually query the cardholder to allow selection of one type ofnetwork over another for conducting the transaction, thereby allowingthe cardholder to manually override any existing preferences.

While the present invention has been described herein with reference toparticular embodiments thereof, a latitude of modification, variouschanges, and substitutions are intended in the present invention. Insome instances, features of the invention can be employed without acorresponding use of other features, without departing from the scope ofthe invention as set forth. Therefore, many modifications may be made toadapt a particular configuration or method disclosed, without departingfrom the essential scope and spirit of the present invention. It isintended that the invention not be limited to the particular embodimentdisclosed, but that the invention will include all embodiments andequivalents falling within the scope of the claims.

What is claimed is:
 1. A method for processing a commercial transaction,the method comprising: receiving at a card reader data from an RFproximity chip card, said data including a first data type indicating anopen-loop transaction account, and a second data type indicating aclosed-loop transaction account; recognizing at the reader the firstdata type and the second data type; selecting at the reader between theopen-loop transaction account and the closed-loop transaction account,wherein the selecting is performed according to a predetermined merchantpreference stored in the card reader; and conducting the transaction atthe reader according to the selected transaction account.
 2. The methodof claim 1 wherein the selecting is performed according to a combinationof a predetermined cardholder preference and the predetermined merchantpreference.
 3. The method of claim 1 wherein the selecting includescausing the reader to pose a query to the cardholder.
 4. The method ofclaim 1 wherein the transaction is conducted by routing the selecteddata type to at least one of a closed-loop transaction processing systemand an open-loop transaction processing system.
 5. The method of claim 4wherein the transaction is conducted by routing the selected data typeto one of the closed-loop transaction processing system and theopen-loop transaction processing system.
 6. The method of claim 5wherein the transaction is routed by operation of a switch.
 7. Themethod of claim 4 wherein the transaction is conducted by routing theselected data type to both the closed-loop transaction processing systemand the open-loop transaction processing system, the method furthercomprising causing the reader to add information to the data typeallowing recognition by only the closed-loop transaction processingsystem.
 8. The method of claim 1 wherein the second data type comprisesinformation regarding a merchant coalition.
 9. The method of claim 1wherein the transaction is conducted by routing the second data type toa server in communication with a database storing information regardingmembers of a coalition.
 10. The method of claim 9 wherein the server isadministered by the coalition.
 11. The method of claim 9 wherein theserver is administered by a third party on behalf of the coalition. 12.A system for processing a commercial transaction, the system comprising:a card reader configured to receive from an RF proximity chip card, afirst data type indicating an open-loop transaction account, and asecond data type indicating a closed-loop transaction account; and aprocessor in electronic communication with the card reader at the pointof sale, the processor configured to: recognize data of the first typeand of the second type, select between the open-loop transaction accountand the closed-loop transaction account according to a predeterminedmerchant preference stored in the card reader, and route the receiveddata to the selected transaction account.
 13. The system of claim 12wherein the processor is configured to select according to a combinationof a predetermined cardholder preference and the predetermined merchantpreference.
 14. The system of claim 12 wherein the processor isconfigured to pose a query to the cardholder.
 15. The system of claim 12wherein the processor is housed within the card reader.
 16. The systemof claim 12 wherein the processor is housed in a separate module at thepoint of sale in electrical communication with the card reader.
 17. Thesystem of claim 12 wherein the processor is further configured to addinformation to the selected data type allowing recognition by only aclosed-loop transaction processing system.
 18. The method of claim 12further comprising a server in electrical communication with theprocessor, with a closed-loop transaction processing system, and with adatabase storing information regarding a coalition.